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Habito to fund mortgages for first-time buyers

Habito is launching ‘Habito Go’, a brand new home-financing service designed to give first-time-buyers the advantages and negotiating power usually only enjoyed by cash buyers.

With Habito Go, buyers are able to ‘upgrade’ their mortgage recommendation to a guarantee of funds to buy the property in cash, while they simultaneously continue their mortgage application through Habito’s brokerage.

Following a period of extensive testing and research, Habito Go has been designed to level the playing field, giving first-time buyers unprecedented buying power allowing them to present themselves as cash buyers with a game-changing offer. A recent survey of 2,000 buyers and sellers conducted by YouGov for Habito, showed that a third (34%) of sellers said they would be more likely to consider accepting an offer from a buyer if they were to pay in cash.

Habito Go has also been designed to alleviate the fear of uncertainty associated with buying, something which affects almost half (47%) of first-time buyers, as well as delays – more than 2 in 5 would-be buyers said they were resigned to a long and drawn-out process. While the process often takes weeks or even months, with Habito Go, buyers can get the keys to their home in as little as two weeks, thanks to fast-track affordability checks, valuations, searches and comprehensive legal work. And this should resonate with sellers too for whom the majority (7 in 10) value speed and a smooth process as much as, if not more than, achieving the asking price.

Home-buying, especially for first-time buyers, is characterised by fear, unpredictability and in many cases, dissatisfaction; of those who own a home, one in ten lost out on a property purchase (rising to almost two in five in London) and 21% admit they ended up settling for a property that isn’t right for them.

Tellingly, two in five (43%) would-be homeowners claimed that being able to fully trust the estate agent would make the home-buying process better. With that in mind, Habito Go offers a built-in concierge service meaning customers get an expert by their side throughout the process. Go customers will get insider tips and personalised advice from their expert on everything from bidding wars and price negotiation to what happens after their offer is accepted, right up to getting the keys to their home.

Daniel Hegarty, Founder and CEO of Habito says: “All our research tells us that home-buying is riddled with uncertainty and a lack of control that most people just don’t feel equipped for. And first-time buyers probably have it the hardest. With Habito Go, we hope to alleviate this by arming buyers with the power of a cash offer for their dream home while giving sellers the reassurance of a guaranteed sale that is achievable in a fraction of the time normally required to complete a purchase.”

Typically, approved Habito Go customers can get their loan offer in as little as 24 hours, so they can make an attractive cash offer to estate agents and sellers, putting them in a stronger negotiating position on price. Habito Go customers can expect to make a saving on the asking price of their property with a cash offer.

Andrew Hagger, personal finance expert, says: “’Habito Go is a new and innovative product that has the potential to wipe out some of the major hassle factors encountered by first-time buyers. The speeding up of the process and ability to negotiate a ‘cash buyer’ type discount could be highly beneficial and many borrowers could see some or all of the product fee costs negated due to a lower purchase price being achieved. Removing stress, worry and giving first-time buyers a greater chance of getting their number one choice of home – rather than always wondering what might have been when you’ve had to settle for second, third or fourth choice – is a great benefit of Habito Go.”

How Habito Go works:

Habito Go is available exclusively to approved Habito first-time-buyer mortgage customers with up to 85% loan to value (LTV)

Using information already given in the mortgage application process, each customer’s eligibility is assessed along with the likelihood of being approved for mortgage financing

Once approved, the homebuyer can make their Habito Go ‘cash’ offer and will only be charged in the event that they complete the purchase of the property, at a rate of 1.95% of the total value of the property. This fee includes fast-tracked valuation and legal work, and the certainty that the buyer has the money they need to buy the home they want

As soon as the customer applies to use Habito Go, a survey is carried out on the property to ensure it meets Habito’s criteria. The buyer will then continue to apply for their mortgage through Habito’s brokerage, with the mortgage sometimes being secured on the property prior to completion. In the instance that the mortgage doesn’t come through in time, the buyer would buy their home with the Habito Go loan and pay interest at a fixed rate of 0.5% of the loan per month (calculated daily) until the mortgage is completed. The mortgage is then used to pay off the Habito Go loan

As an official homeowner, Habito would cancel the customer’s original mortgage application, which was a mortgage for a new purchase – and apply for a remortgage instead

Habito will ensure the Habito Go customer gets a mortgage for the same amount and the same term as the original mortgage we cancelled. If there’s any difference in the cost of that new mortgage over the fixed term, we will pay the buyer the difference as cashback

As part of the Habito Go service, customers will get their own expert by their side, who’ll give them insider tips and personalised advice through bidding wars, price negotiation and beyond – all the way to getting the keys

Habito will be funding the first phase off its own balance sheet. Habito is in the final stages of agreeing terms with an investment partner

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